What i don't understand...
If DVD players can downconvert 5.1 to stereo, then why do the authouring houses even bother loading the extra stereo stream into the .VOB?? It just takes up more space.
Am i missing something?

I am guessing that for older systems, there is no down conversion. And from my experience, you get more clarity from the center channel of a non-digital Dolby Surround receiver (prior to 5.1) when you choose the 2.0 versus the 5.1.

Virually all recent movies are encoded with 5.1 and DTS for best listening experience. Keep 5.1 this is what it's for. Your receiver can then play it as 5.1, 2.0 or plain stereo (whatever you choose). If instead you choose 2.0 you cannot "upgrade" it later to 5.1 (during playback).

The stereo 2.0 stream sound much better and clear than a 5.1 downmixed to stereo.

Is this from personal experience, and is it noticeable on an older system that doesn't even support true 5.1?

I just remember reading it somewhere. cant remember exactly where but had read that is why movie studios inclide the 2.0 stream along with the 5.1 stream. In practice, its best to see for yourself and be the judge. Everyone has their own opinions about what sounds better. I have surround speakers so never use stereo or need to downmix.